Correlation Between Micron Technology and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Micron Technology and United Microelectronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Micron Technology and United Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and United Microelectronics, you can compare the effects of market volatilities on Micron Technology and United Microelectronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Micron Technology with a short position of United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and United Microelectronics.
Diversification Opportunities for Micron Technology and United Microelectronics
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and United is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics and Micron Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Micron Technology are associated (or correlated) with United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Micron Technology i.e., Micron Technology and United Microelectronics go up and down completely randomly.
Pair Corralation between Micron Technology and United Microelectronics
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.67 times more return on investment than United Microelectronics. However, Micron Technology is 1.67 times more volatile than United Microelectronics. It trades about -0.05 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.12 per unit of risk. If you would invest 9,941 in Micron Technology on November 9, 2024 and sell it today you would lose (487.00) from holding Micron Technology or give up 4.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. United Microelectronics
Performance |
| Timeline |
| Micron Technology |
| United Microelectronics |
Micron Technology and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and United Microelectronics
The main advantage of trading using opposite Micron Technology and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, United Microelectronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Microelectronics will offset losses from the drop in United Microelectronics' long position.| Micron Technology vs. Great Western Minerals | Micron Technology vs. Enterprise Bancorp | Micron Technology vs. T Rowe Price | Micron Technology vs. Aviat Networks |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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